Wednesday, Jun. 18, 2014, 11:36 AM UPDATED 2:25 PMBy SubPrime Auto Finance News Staff
NEW YORK -
While auto financing has recovered to the point where originations and portfolio sizes are at record levels, the 2014 Makovsky Wall Street Reputation Study showed many financial services companies continue to struggle with reputational and customer services issues stemming from the financial crisis six years ago.
Study orchestrators found that 81 percent of communications, investor relations and marketing executives surveyed last month said the financial crisis continues to have a major effect on stakeholder perceptions of their companies.
The study revealed this negative perception is taking an even bigger toll on sales as the companies interviewed reported an average business loss of 27 percent — what authors believe to equal billions of dollars — in the last two years as reputational and customer service issues persist.
This average loss was significantly higher in the past 12 months than reported in the 2013 study.
These are major findings of the 2014 Makovsky Wall Street Reputation Study, designed to determine the state of reputation of the financial industry and identify best practices and emerging trends. This third annual study was conducted by Ebiquity in May.
“The financial crisis has left scars, and those scars may be permanent,” Makovsky executive vice president Scott Tangney said. “The majority of companies told us they continue to face constant reputation and customer satisfactions issues related to trust, regulation, products, liquidity and capital, financial performance and compensation.
“The standing of many has been diminished with nearly half of executives telling us that the crisis fallout made their firm competitively vulnerable allowing with their closest or direct competitors to gain an advantage,” Tangney continued.
Improving reputation has become paramount at financial services firms, according to the study, especially as negative perception is having a greater impact on revenue loss.
“This sour climate is here to stay for the foreseeable future as the majority of executives in charge of financial brands and corporate reputation believe it will still take up to five more years to restore their company’s reputation to pre-financial crisis levels,” Tangney said.
When asked to rank the issues that negatively affected their company’s reputation over the last 12 months, the top three responses from executives at financial firms included:
—64 percent: Negative perception of the financial services industry
—55 percent: Regulatory investigations, actions and fines or lawsuits
—53 percent: Capital and liquidity challenges
Study orchestrators pointed out the importance of each of these issues has increased compared with last year’s results.
In addition, 52 percent of the firms surveyed said financial performance and excessive bonuses dragged on their reputation in the past 12 months.
Furthermore, 50 percent of participants reported customer dissatisfaction and corporate governance were negatively charged issues for their company.
Looking to the next 12 months, financial services firms said their greatest reputational challenges will be:
—Differentiating from financial firms and competitors with bad reputation problems
—Improving the reputation of the company to increase sales
—Rebuilding trust in the overall financial system
—Increasing awareness with stakeholders
“The top challenges to financial services companies in rebuilding reputation have been consistent over the past three years,” Tangney said. “At the same time, we have seen certain negative issues that we believed had been resolved or become less important — like liquidity challenges, problematic products and compensation — being thrust back into the limelight to the detriment of corporate and industry image.”
To understand current communications strategies being deployed at financial services brands, the 2014 Makovsky Wall Street Reputation Study explored emerging factors that were most critical in the next 12 months to strengthen corporate reputation. At least six out of 10 of executives ranked each of the following initiatives as “very important” to achieving stronger reputation:
—64 percent: Improve customer satisfaction
—64 percent: Take ownership of issues that matter to customers
—60 percent: Employee satisfaction
—60 percent: Better financial performance
Ebiquity, formerly Echo Research, completed 225 interviews with executives and managers responsible for the management and supervision of communications, investor relations or marketing at large and mid-sized publicly traded and private financial services institutions. The type of companies surveyed included banks, brokerage firms, asset management firms, insurance companies, real estate companies, credit card companies, mortgage lender, venture capital firms and credit unions and financial technology firms.